The purpose of this project is to analyze the determinants of investment behavior in voluntary community hospitals. The research has both a theoretical and empirical component. The focus of the model is upon the relationship between physicians and hospitals, who are presumed to be involved jointly in a potentially non-cooperative game with respect both to the allocation of resources available to medical institutions and to the selection of a particular input mix. An important aspect of this game is interhospital competition for medical staffs in markets with more than one hospital where the competitive medium is the availability of factor services to physicians in rival institutions. Data are drawn primarily from the 1976-1978 CHSS survey of hospitals in the Commonwealth of Pennsylvania. The goal of this research is to construct a simultaneous equations econometric model of the investment process at the hospital level and in a dynamic context. This model will then be used, among other purposes, to study the relationships between market structure and its long-run implications for the quantity and mix of physical assets held in the hospitals of an area.